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E-rate: case summaries

The Commission overturned USAC’s rejection of a service provider-submitted invoice for reimbursement of non-recurring costs, because USAC had reclassified the services from non-recurring to recurring without providing adequate notice of such reclassification to the school. USAC had modified the school’s funding request and reclassified all requested services as recurring charges, without notifying the school that it had done so. Upon receiving its Funding Commitment Decision Letter (“FCDL”) from USAC, the school had instructed its service provider to begin implementing the requested services. It was not until USAC denied payment on the invoice submitted by the service provider that the school was aware that the change had been made. The Commission ordered USAC to obtain additional information from the school to determine whether the services requested by the school were for recurring or non-recurring charges and then process the invoice accordingly.

Minimum Usage Requirement for E-rate Funded Equipment

Prior to 2003, the E-rate rules permitted applicants to upgrade their equipment on an annual basis, regardless of whether their existing equipment continued to have a useful life. Relying on these prior rules, the Commission overturned a decision by USAC seeking reimbursement for equipment purchased in 1998 using E-rate funds that was installed and used for only 19 months before being replaced with new E-rate funded equipment in 2001. Notably, the current rules require applicants to use all equipment purchased with E-rate funds for a “reasonable period of time.” While the Commission indicated that its decision was based on the rules in effect at the time and concluded in the Order that the applicant’s decision to uninstall was “not unreasonable,” the Commission did not indicate whether its decision would have been different under the current rules.

Solicitation of Lowest Cost Bid

Despite agreeing with USAC’s assessment that two applicants had violated the competitive bidding rules by failing to evaluate price as the primary factor, the Commission granted the applicants’ appeals where the record showed that each applicant ultimately selected the lowest priced responsive bid. In one case, the applicant weighed cost and percentage of needs equally at 40%. National presence was weighted at 20%. Ultimately, however, the applicant chose the lowest cost bid. In the other case, the applicant weighed nine separate criteria, including cost, equally. In one of its selective bidding processes, the applicant chose the second lowest price bid, however the lowest price bid was filed late and was not fully responsive. Thus, the Commission noted that the applicant had chosen the lowest cost responsive bid.

Failure to Collect Form 479

The Commission denied a request by a consortium to waive the FCC Form 479 requirements and review USAC’s decision to recover disbursed funds. The Form 479 is used by administrative authorities to notify a billed entity of the status of the administrative authority’s compliance with the Children’s Internet Protection Act (“CIPA”). After receipt of the Form 479, the billed entity then must certify on it Form 486 that it collected completed and signed Form 479 from the administrative authorities that the billed entity represents. In this case, an auditor found that the consortium had failed to collect the Forms 486 from its members and did not complete the certification on the Form 486. Accordingly, the Commission affirmed USAC’s decision to recover disbursed funds from the affected funding years.

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